XN000022-1996-12-11 — Page 25

Speech by Secretary for Housing on rent control (first resolution)

Following is the speech by the Secretary for Housing, Mr Dominic Wong, in response to the motion debate on the first resolution on Landlord and Tenant (Consolidation) Ordinance moved by the Hon James To in the Legislative Council today (Wednesday):

Mr President,

The motion moved by the Honourable James To, if passed, will be a retrograde step and a major setback in the final process of abolishing rent control for pre-war residential premises. I wish to highlight some of the bad effects of this resolution, if passed, and, in so doing, correct a few misconceptions.

The existing rent control provisions were introduced for pre-war residential premises in 1947 as short-term measures to counter the unusually high rent increases at a time when there was an acute shortage of rented accommodation in Hong Kong. But the reasons for this measure have disappeared in recent years. Private, or in general, housing stock in Hong Kong has increased manifolds and market rents have also stabilised. Rent increases average about 7.5% a year in the past five years and 5% per year for the past three years. Hence, in June 1993, this Council passed an amendment to the Ordinance to abolish rent control three years later, and that is, on 31 December this year. Average rent now ranges from 80% to 90% of the market level. It is surprising therefore that some Members of this Council are now trying to overturn the Council's previous decision, and to put the clock back by extending rent control for another two years for a small group of residents.

Rent control is against our free market economy policy, and is a hidden subsidy to tenants at the expense of landlords. Rent control is introduced only on exceptional grounds, those grounds that I have already outlined. The effect of rent control is that even those tenants who can afford to pay more for better housing hold on to the controlled premises so as to take advantage of the low rent. On the other hand, as some Members have mentioned, landlords are deprived of the right to charge market rent, and this is not fair to them. Hence, they are reluctant to spend money on maintaining and refurbishing the buildings. The outcome is building deterioration, slums and social immobility. In the end, they will neither benefit the tenants nor landlords.

Mr President, I think we must not mix up rent control with social welfare subsidy, which is means-tested. Rent control is not a means-tested scheme, and is not devised to help the poor. It is applied regardless of tenants' financial position. In another word, the poor and the rich all get it. Those in genuine financial hardship should turn to the Comprehensive Social Security Scheme which gives rent allowance of up to $4,600 a month for those in need. Where is the argument for rent protection of a small group of residents whose financial position is similar to the rest of the community?